The Japan Economic Foundation and the Taiwan Institute of Economic Research are hosting an international symposium, from yesterday through tomorrow, on the theme of “Seeking a new balance in the regional integration of the Asia-Pacific region.” For years now, the foundation has been organizing an Asia-Pacific forum focusing on free-trade agreements (FTA) and regional integration. The international symposium being held in Taipei this year is related to the Asia-Pacific forum, as it focuses on recent FTAs and ways to advance regional integration.
Having such a significant symposium in Taipei implies that Asian countries are becoming increasingly interested in Taiwan’s contributions to the advancement of Asia-Pacific regional economic integration. After all, Taiwan is one of the most advanced economies in the world, boasting a successful network of small and medium-sized enterprises and a well-educated and highly skilled workforce.
Taiwan can be a regional player by effectively using available resources, including robust economic momentum and values, toward building the foundation for engagement with its partners in the region.
Taiwan should be a cooperative role-player, so that it is not marginalized or excluded. ASEAN’s intention to forge an East Asian common market by 2015 means that Taiwan’s export-oriented economy could lose capacity and its competitive advantage. If Taiwan decelerates business with its regional partners, these partners may ask if Taiwan still has a role to play in the region. Taiwan cannot rely solely on trade with its biggest trading partner, China, to maintain a sustainable economy.
What else can Taiwan do to promote regional integration? The answer lies in the signing of FTAs under the framework of regional trade agreements (RTA).
FTAs will allow Taiwanese firms access to larger markets, while boosting consumer choices. Furthermore, potential RTAs may attract more foreign direct investment. They strengthen regional integration while stimulating job growth, holding unemployment at a steady rate and securing wages. In Taiwan, free trade will also cause certain domestic production to decrease, a drop in sales/profits for some domestic businesses and potential job losses among less competitive producers.
Economic cooperation brings political benefits as well. Economic cooperation can lead to additional sharing of intelligence and solutions in non-traditional security areas such as climate change, pandemic influenza, illegal immigration, organized crime, drug smuggling and international terrorism. Regional integration plays an important role in boosting Taiwan’s economy and spurring free trade. Taiwan and its partners benefit from inking FTAs, and forming alliances and trade blocs with the aim of achieving greater trade liberalization and promoting interdependence.
In other words, Taiwan can exercise its strengths to promote its interests as well as benefit the region. The phrase that comes to mind here is “smart diplomacy,” which has been used to great effect by the administration of US President Barack Obama. Taiwan cannot rely on hard political or military power, but can rather use economic and social soft power to enhance regional cooperation.
Taiwan needs to be part of the global marketplace and there is no reason for it to be marginalized. Taiwan’s active democracy, competitive and skilled workforce and stable society are its strongest advantages and valuable inputs toward pushing the region forward. Any feasibility study on RTAs in this region that excludes Taiwan would be unfeasible and unbalanced.
David Hong is the president of the Taiwan Institute of Economic Research.
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